Iowa is a state of small towns. So are big stretches of Illinois, Missouri, Kansas and Wisconsin. I help a lot of buyers purchase homes in towns where the population sign has three or four digits, and the process has a few quirks worth knowing up front.

Appraisals can take more work

Appraisers value a home by comparing it to similar recent sales nearby. In a small town, there may only be a handful of sales in the past year, and few of them look like your home. Appraisers can reach farther out in distance and time, but it can take longer and occasionally come in lower than the contract price. Build a little extra time into your closing date, and talk with your agent about a plan if the appraisal comes in short.

Wells and septic systems

Many small-town and rural homes aren't on city water and sewer.

  • Private wells: Some loans require a water test for bacteria and nitrates. Even when not required, it's worth doing.
  • Septic systems: In Iowa, a time-of-transfer inspection is generally required when a home with a private septic system is sold. Repairs or replacement can be expensive, so know the system's condition before you close.

Acreage and outbuildings

Homes on several acres, or with large outbuildings, can have different rules depending on the loan. Most lenders focus on the home itself, and income-producing farmland usually requires a different kind of loan. Tell your lender early if the property has significant acreage.

Insurance and utilities

Distance from a fire station and the age of the home affect insurance pricing. Propane, well pumps and longer driveways to plow can change your monthly costs. Get an insurance quote early. Here's more on budgeting for insurance.

Financing advantages

USDA loans let eligible buyers in most small towns and rural areas buy with zero down. Here's how USDA eligibility works. Small-town prices also tend to fall comfortably within Iowa Finance Authority limits, so state assistance may be an option too.

You don't need a lender down the street

Everything from application to disclosures can be handled electronically, and closing happens with a local title company or attorney. What matters is working with someone who knows how small-town appraisals, wells and septic systems fit into the timeline. I've closed loans in small towns all over the Midwest and I'm glad to help wherever you're buying. See the states I serve.